Matt Levine, Columnist

Better to Round Up Than Down

Also Brexit polling, index additions and high-school market structure.

June 25, 2018 at 3:01 PM UTC

Matt Levine is a Bloomberg Opinion columnist. A former investment banker at Goldman Sachs, he was a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz; a clerk for the U.S. Court of Appeals for the 3rd Circuit; and an editor of Dealbreaker.

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Four is the loneliest number.

If a company has one million shares outstanding and makes $1,014,900 of net income in a quarter, it has earnings per share of $1.0149, which rounds—in the normal procedure of rounding EPS to the nearest penny—to $1.01. If instead it makes $1,015,100 of net income, it has earnings per share of $1.0151, which rounds to $1.02. A difference of $200—0.02 percent—in net income leads to a difference of $0.01—0.99 percent—in earnings per share. That $200 is 50 times more powerful in EPS than it is in income.